Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)

CHAPTER 7 - Superannuation guarantee - jurisdiction of Australian Industrial Relations Commission

Overview

7.1 The amendments contained in Part 1 of Schedule 4 of the Bill will make technical amendments to the Superannuation Guarantee (Administration) Act 1992 ( SGAA).

Summary of the amendments

Purpose of the amendments

7.2 The amendments clarify the jurisdiction of the Australian Industrial Relations Commission (AIRC). [Item 1, new subsection 5B]

Date of effect

7.3 The amendments will apply from the enactment of the SGAA and the Superannuation Guarantee Charge Act 1992 ie from 1 July 1992.

Background to the legislation

7.4 The Treasurer announced a range of measures in his statement on Superannuation Policy on 28 June 1994, modifying the operation of the superannuation system and the interaction between award superannuation and the superannuation guarantee regime. This measure is one of the changes announced in the Statement.

7.5 With the enactment of the superannuation guarantee legislation, there have been doubts expressed concerning the power of the AIRC to continue to arbitrate on superannuation matters. In light of the superannuation guarantee legislation, the AIRC itself has acknowledged concerns about its on going role and jurisdiction in this area.

Explanation of the amendments

7.6 The AIRC's principal function is to prevent and settle industrial disputes by conciliation and arbitration. In doing so, the AIRC must, amongst other things, ensure that the system of awards and other employment agreements provide for secure, relevant and consistent wages and conditions of employment. In this regard, superannuation is a burgeoning area that falls for consideration by the AIRC.

7.7 The principal object of the superannuation guarantee legislation is to establish minimum standards of superannuation support for employees, whilst at the same time, leaving employers and employees free to negotiate higher standards. It complements the legal and administrative framework which regulates industrial relations and award superannuation generally.

7.8 In this regard, the superannuation guarantee legislation complements the AIRC's objectives and functions. The superannuation guarantee legislation is not intended to be an all encompassing or exhaustive code regulating the field of superannuation. Rather, it establishes minimum standards of superannuation support, and is one method of encouraging employers to comply with their award obligations.

7.9 It is generally accepted that the operation of the superannuation guarantee legislation has not affected the jurisdiction, powers, or functions of the AIRC, although there is no express statement in the SGAA or the Industrial Relations Act 1988 to this effect.

7.10 For this reason, and because there has been doubt expressed in some quarters concerning the powers of the AIRC, the amendment inserts a new subsection 5B into the SGAA. This provision makes it clear that the SGAA and the Superannuation Guarantee Charge Act 1992 (SGCA) do not alter in any way the substantive jurisdiction, functions and powers of the AIRC. [Item 1, new subsection 5B(1)]

7.11 The operation of the amendment can be illustrated in the following way. Under paragraph 170MD(1)(a) of the Industrial Relations Act 1988 , the AIRC may refuse to certify an agreement if it thinks that any of the terms is one that the Commission would not have power to include in an award. It is conceivable that the AIRC might consider that a term relating to superannuation entitlements is one that the Commission does not have power to include in an award because of the operation of the superannuation guarantee legislation.

7.12 The amendment to the SGAA ensures that this cannot occur. That is, under the amendment, the AIRC must ignore the operation of the superannuation guarantee legislation in determining whether it has power to certify an agreement. This preserves the jurisdiction, functions and powers of the AIRC.

7.13 The amendment makes it clear that apart from three specific provisions, the operation of the Industrial Relations Act 1988 and the jurisdiction, functions and powers of the AIRC under that Act, are unaffected by the operation of the superannuation guarantee legislation.

7.14 Specifically, under subparagraphs 113B(a)(ii), 170MC(2)(a)(ii) and 170NC(2)(a)(ii) of the Industrial Relations Act 1988, the AIRC may take into account the SGAA and the SGCA in determining whether employment agreements disadvantage employees by reducing their entitlements or protections in relation to their terms and conditions of employment [new paragraph 5B(2)(b)] . The AIRC has the power to veto agreements which do not provide adequate superannuation support. The amendment preserves the AIRC's right to take account of the superannuation guarantee legislation when addressing superannuation matters under employment agreements/awards.

7.15 This amendment does not apply to any express reference to the SGAA or the SGCA in the Industrial Relations Act 1988 . [Item 1; new paragraph 5B(2)(a)]